Showing posts with label risk analysis. Show all posts
Showing posts with label risk analysis. Show all posts

Sunday, April 24, 2022

If you've ever handled a penny, the government's got your DNA.

File this under: Wanted: new conspiracy theories—all ours came true.

When DNA testing and genomic profiling was first rolling out as a mass-market product, I remember hearing people objecting to it saying things like, "I don’t want them to have my DNA". 

These worries were summarily dismissed by science-supporting elites as paranoia on the part of anti-science or antisocial bumpkins. 

It turns out an ounce of caution here was warranted

And then COVID happened . . .


And now 23andMe has come full circle:

Wojcicki says that’s just not going to happen. “We’re not evil,” she says. “Our brand is being direct-to-consumer and affordable.” For the time being she’s focused on the long, painful process of drug development. She’d like to think she’s earned some trust, but she hasn’t come this far on faith.
Caution continues to be warranted by at least some elites (Macron refuses Russian COVID test), and I don't blame them--be sure to click through to the Atlantic story about the lengths to which the White House goes to protect the president's DNA. 

I understand Macron and the White House taking extreme precautions in this area. I also do not think it is highly likely that anything bad would come of genetic data gathering in general. In fact I tend to be supportive of the secondary (or ulterior) uses that genetic data could provide--provided there are adequate disclosures on the front end and transparency throughout the process. Trust but verify is the right approach.

The level of trust is inversely proportional to the extent to which people's fears get realized even if they are only partially realized. In other words the level of trust is directly proportional to the degree of proven trustworthiness.



Saturday, February 19, 2022

Rather Sorry Than Safe



When friends who are interested in "prepping" ask me about planning for doomsday scenarios, I love the looks on their faces when I reply, "I'm planning on being one of the attacking barbarians ravaging the countryside. Thanks for telling me about your hideout." 

Let's consider the perspective of a prepper in regards to prepping for financial disaster. There are always reasons to be fearful about the future, and it doesn't take too much imagination to spin these true risks into worry of cataclysm. As I write, worries about the COVID-19 pandemic are gradually fading only to be replaced by concern of war with Russia vis-à-vis Ukraine.* 

If you don't have a back-up plan, you are naively gallivanting about while the asteroid circles the planet. Yet if you always hunker down in the bomb shelter, you are letting your fears prevent you from enjoying life. Risk inconsistency can be worse than consistent, willful exposure to high risk. If you are prepared for and understand that actions you are taking are likely risking bankruptcy for the chance to strike it rich and possibly very rich, then the risk you are taking may very well be prudent and necessary. Extremely few entrepreneurial efforts with appropriate upside potential do not inherently contain that kind of downside risk. But if you are running a decent risk of bankruptcy just through your spending patterns and arbitrary investment decisions, you are likely not getting enough reward for the risk. In a more technical sense you are not matching potential return with the level of risk. 

Return is the expected compensation for risk taken. It is not guaranteed nor predetermined. A lot can get in the way and almost always it is a spectrum of potential returns (some of them low if not negative) that result in the expected return. Sometimes we qualify return compensation in terms of a required rate of return. Required can really be thought of as minimum acceptable expected return. In highly efficient markets this required return becomes equal to the expected return as any potential return above this required level gets competed away.

Successful decision making in life as with successful investing is not about avoiding risk or taking risk. It is about understanding and managing the many varied risks one is exposed to while getting the proper potential compensations. 

We simply cannot predict the future nor can we entirely remove our exposure to it as good and bad as it will be. Well, I guess there is one way, but if that is your solution, this post isn't for you at all. For those of us who want to go prudently into that good night, remember the old adage:

Don't try to hedge the end of the world. It's only gonna happen once, and regardless of what you do, it won't work out too well for you.



*Calvin: You're sure?

Adam: Positive. The Soviet Union collapsed without a shot being fired. The Cold War is over.

Calvin: That's what everybody believes?

Adam: Yes, sir. It's true.

Calvin: What? Did the Politburo just one day say, "We give up?"

Adam: Yes. That's kind of how it was.

Calvin: Uh-huh.

Calvin: My gosh, those Commies are brilliant! You've got to hand it to 'em! "No, we didn't drop any bombs! Oh yes, our evil empire has collapsed! Poor, poor us!" I bet they've even asked the West for aid! Right?

Adam: Uh, I think they have.

Calvin: Hah! Those cagey rascals! Those sly dissemblers! Those, uh... They've finally pulled the wool over everybody's eyes!

--"Blast From The Past" via IMDB